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China Insights

Monthly update on Chinese markets
22 July 2021
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    Summary:

    • Beijing’s concerns with regards to the Internet sector centres upon three core areas – anti-competitive/monopolistic behaviour, data security issues, and customer protection. The Chinese government is complementing new regulatory measures to promote healthier growth of the industry; not to inhibit it
    • Uncertainty around regulations have caused US and China internet stocks to part ways since April 2021, with the CSI Overseas China Internet index dropping 16 per cent whereas its US counterpart – Dow Jones Internet Composite index – has gained 12 per cent
    • The ‘big four’ Chinese internet players appear more attractive relative to their American peers on a fundamental basis – for example revenues have grown more quickly than they have for Fang stocks over the past five years